Ambiguity and accounting: The elusive link between information and decision making

This paper argues that theories of choice, as reflected in micro economics, n-person game theory, or statistical decision theory, are incomplete and potentially misleading bases for thinking about and modifying the design of information systems, including accounting systems. The argument stems from recent behavioral research on the ambiguities surrounding individual and organizational decision making. It is developed around four simple assertions: (1) Contemporary ideas about information engineering tie strategies for seeking, organizing, and utilizing information to ideas of anticipatory, consequential choice as pictured in decision theory. (2) Behavioral studies of decision making in organizations indicate that the portrayal of decision making and information found in decision theory ignores or significantly underestimates the ambiguities of choice. (3) Analysis of discrepancies between the actual behavior of decision makers and the recommendations of decision theory shows that the behavior often introduces elements of good sense not routinely recognized within the theory, so an information system that is closely articulated with choices in the way anticipated by decision theory is often incomplete. (4) As a result, the engineering of information might profit from conceptions of decision making and information that blend the traditions of theories of choice with an understanding of the traditions of history, culture, and literature.